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TMI Blog2016 (4) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... on of imposing penalty u/s 271(1)(c) of the Act. The Hon'ble Delhi High Court in CIT vs Aero Traders (P) Ltd. (2010 (1) TMI 32 - DELHI HIGH COURT ) has held that no penalty u/s 271(1)(c) can be imposed when income is determined on an estimate. It is apparent that in the instant case, the bedrock of penalty is estimation of scrap, hence, the penalty on this issue cannot be sustained. As far as the penalty on difference in VAT account is concerned, it is seen that the amount of ₹ 1,01,922/- disallowed as expenditure pertains to difference in VAT rates in Delhi and U.P. It is not the case of the Department that the assessee had made a bogus claim of the expense. The disallowance was made on the basis that since the assessee followed m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009. Assessment in this case was completed u/s 143(3) of the Act on 15-12-2011 wherein following additions were made:- (i) On account of difference in stock Rs.4,21,972/- (ii) On account of VAT difference Rs.1,01,922/- (iii) On account of ESI PF not paid by due date ₹ 16,946/- (iv) On account of Charity Donation ₹ 2,500/- Thus, total addition of ₹ 5,43,340/- was made to the returned income and income of the assessee was assessed at ₹ 36,69,852/-. A survey u/s 133 A of the Act was conducted on 16-01-2009, the value of scrap in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Further, the amount of ₹ 1,01,922/- was debited to SDE MS (TXP) Store, O/o DET MS(TXP), Lucknow. On verification of the journal voucher, it was gathered by the AO that the amount was reflected due to VAT discount in respect of which the assessee submitted that VAT had been paid on account of BSNL, Lucknow which had not been received back and hence, the impugned sum was debited under the head VAT discount. However, the AO rejected the submissions made by the assessee on the ground that the assessee was following mercantile system of accounting and as such the impugned sum should not have been debited to the Profit Loss Account. It was held by the AO that the assessee deliberately debited the amount of ₹ 1,01,922/- to inflat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,21,972/- on account of difference in the stock, the survey team had found a small heap of scrap which was only about 1500Kg but the survey team wrongly estimated the weight of scrap at 15000 Kgs. It was further submitted that the HDPE Pipe is an excisable item and the assessee had duly maintained stock register of scrap in Form No.-4 and RG-1 as prescribed by the Central Excise Department. The Stock as per Stock register was 4.155MT which included the stock of scrap in heap and scrap lying in the bags. The Ld. AO estimated the scrap at l0000 Kg and made the addition of ₹ 4,21,972/-. The above addition was made only on account of excess estimation of stock of scrap, otherwise the assessee has neither concealed the particular of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the penalty has been rightly levied and deserves to be upheld. 10. We have heard the rival submissions and have perused the relevant material available on record. It is seen that penalty has been imposed mainly on the basis of difference in the weight of scrap shown by the assessee and as estimated by the Assessing Officer. Apart from that, there is nothing to prove that the assessee has, in fact, concealed its income or furnished inaccurate particulars of income. 11. It is an admitted position that the assessee accepted the addition and did not challenge it further. But the mere fact that an addition has been accepted or is confirmed in quantum proceedings cannot be conclusive for the imposition of penalty. Further, the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 479 (MP) has held on similar facts, that, before an assessee could be held liable for penalty u/s 271(1)(c), it must be found that the assessee has consciously concealed the particulars of his income. The Tribunal had not found that the expenditure claimed by the assessee was not incurred at all or that it was claimed in earlier years or that the assessee deliberately made a false claim of deduction in the assessment year in question. Therefore, the Tribunal was not justified in holding that the assessee was liable to pay penalty under section 271(1)(c) . Hence, in our considered opinion, the levy of penalty on this issue also cannot be sustained. 14. The other two items on which the penalty has been imposed are ₹ 16,946/- on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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